In my editorial this month I thought I would take the opportunity to focus on two topics that are back in the headlines ownership unbundling of Europe’s large power companies and the UK’s nuclear future.
You won’t be surprised that I begin with E.ON’s ‘thunderbolt from the blue’ announcement, offering to sell its high voltage network business. In one fell swoop Germany’s biggest utility becomes the first to satisfy the European Commission’s master plan to force Europe’s vertically integrated energy companies to sell off their transmission grids and focus exclusively on electricity production and supply. This is a clear victory for the Commission.
However, although this unilateral move is without doubt bad news for the German and French governments, who have led the opposition to the Commission’s plan, does it really signal the beginning of the end of the resistance? Or is it more a case of winning a battle, but not the war?
There is great hope that agreement or at least some sort of deal on this issue, which has been running for over 12 months, can be reached in June when European energy ministers next gather. I suspect in the coming months we will become very familiar with the term “ownership unbundling”. In this month’s ‘Analysis’, Tim Probert, PEi’s Associate Editor, takes a close look at the whole unbundling issue and asks whether it will really open up the EU’s electricity to true competition.
The other topic I want to touch on is nuclear power generation, which is clearly a ‘hot topic’, in more ways than one. This is particularly true for the UK, following the government’s announcement back in January, albeit after some governmental hand wringing, that construction of new nuclear power stations would go ahead. The most interesting aspect of the announcement was of course that the nuclear plants would be built with no direct state subsidy, a UK first in terms of new nuclear build.
This did raise a few eyebrows and some commentators questioned the likelihood of private companies taking up the offer without some sort of state support, when you take into account the high cost of building and maintaining a nuclear power station. Nonetheless several companies, including EDF, expressed their interest publicly and made it very clear that the UK government’s proposal had true merit.
John Hutton, the UK’s business secretary, recently gave an interview with the Financial Times in which he gave some interesting little tidbits on the state of play of nuclear in the UK. Without naming names he said that there was a “queue” of potential investors ready to take up the multi-million pound construction contracts as soon as the government met its commitment to “clear the deck” of regulatory hurdles, and that he would be “very disappointed” if nuclear power’s share was not significantly above its present 19 per cent share of UK generation, over the next 10-15 years.
Hutton also refused to rule out the government reducing its 39 per cent stake in British Energy, the owner and operator of the UK’s existing nuclear fleet. Discussions are taking place behind closed doors, but I expect to hear some major announcements in the coming weeks.
Without wishing to blow our own trumpet, I believe that PEi may have gone one better than the Financial Times because this month we have an exclusive interview with Malcolm Wicks, the UK Energy Minister. Here he discusses the UK’s current energy policy, including plans for new nuclear power stations, the controversial carbon capture and storage competition and how the UK aims to meet its highly ambitious renewable energy targets. I very much hope you enjoy reading it.